Forex & commodities on December 12, 2017: thoughts & outlook

Here are my discretionary thoughts on forex and commodities (oil, gold, silver, etc). I only trade the S&P 500’s ETFs.

Thoughts

The U.S. dollar’s price action is mildly bullish.

Gold and silver grinding lower = still bearish.

Looking for a divergence in gold and silver before precious metals can bottom.

Where will the Euro, Yen, and Canadian dollar be if the USD Index hits 96?

3 pm: The U.S. dollar’s price action is mildly bullish.

Brady said at 12:25 pm that the Republican House and Senate deals are on track to reach a tax bill deal by this Friday. Both the USD and S&P 500 tried to sell this news, but the markets instantly bounced back. The “buy the dip” price action is still there.

As you can see, the S&P’s “buy the dip” mentality is much stronger than that of USD’s. So even though I think the USD will go up after the Republican tax bill is passed, I don’t think it will go up to e.g. 100. Its price action is too weak.

3 pm: Gold & silver grinding lower = still bearish

Gold and silver continue to grind lower.

This is the worst kind of price action. Grinding lower usually ends with a mini-crash (e.g. silver falls 5% in one day, gold falls 3%) with a big upwards spike in the gold:silver ratio.

There is one small bullish price action right now. While gold continues to make new lows, silver hasn’t made new lows over the past 3 days. (Silver typically leads gold).

5 am: Momentum divergence in gold and silver

I think gold and silver should make a momentum divergence before they can make a medium term bottom. Silver is starting to make his divergence, but gold has not made a divergence yet.